Project summary Non-coding RNAs have diverse functions in eukaryotic cells. Use of these non-coding RNAs in therapeutic approaches is a promising but rather unexplored direction in biomedical research. We discovered a new class of small non-coding RNAs, piwi-interacting RNAs (piRNAs), that together with their protein partners, Piwi proteins, recognize and silence endogenous genomic parasites called transposable elements. The silencing of transposons is critical in germline cells and the failure of piRNA-mediated repression leads to sterility in both Drosophila and mice. The mechanism of biogenesis of piRNAs appears to be distinct from that of other classes of small non-coding RNAs, microRNA and siRNA. piRNAs are encoded in distinct genomic regions dubbed piRNA clusters that work as memory banks to store inactive copies of past transposon invaders. piRNA clusters produce long ncRNA transcripts, pre-piRNAs, that are further processed to mature piRNAs, which work as guides to recognize and repress transposon sequences. We showed that piRNA clusters have a unique chromatin signature that is essential for their expression and identified a protein complex that directly recognizes these chromatin marks. We further show that this complex is directly involved in transcription of pre-piRNA precursors and that transcription of clusters is unusual in a number of ways. Now we want to capitalize on our findings and understand how transcription and early steps of piRNA biogenesis are regulated. To meet these objectives we will dissect the molecular mechanism of piRNA biogenesis using Drosophila melanogaster. We will explore initiation and termination of pre-piRNA transcription using the combination of a new generation of transcriptome analysis tools as well as transgenic and genome editing approaches. We will also test the role of two complexes, Rhino/Cutoff and TREX, in transcription and processing of pre-piRNA. Our studies will help to advance our understanding of the mechanism of TE silencing, which is important for both fertility and for genomic stability in somatic cells. It will also provide the basis for future use of the piRNA pathway as a tool in research and therapy. Importantly, the significance of the proposed research extends well beyond answering important questions in the non-coding RNA field. Our studies will provide clues to how co-transcriptional sorting of different types of RNAs into distinct processing pathways operates. It explores fundamental mechanisms that control transcription and early post- transcriptional processes.